John Eales

The Australian - The Deal - - News - John Eales eales@eales.com.au

It hurts not to ask a ques­tion

You may re­mem­ber from The Smartest Guys

in the Room, the 2005 doc­u­men­tary on the demise of En­ron, that the cor­po­ra­tion’s slo­gan at the time was “Ask why”. The irony is that al­most no one, out­side of a cou­ple of an­a­lysts and in­vestors, ac­tu­ally asked that ques­tion.

Dur­ing and after that time, when an­ten­nae should have been at their most sen­si­tive, Bernie Mad­off led the big­gest Ponzi scheme in cor­po­rate his­tory, los­ing an es­ti­mated $US65bn of clients’ money over a decades-long scheme. In­cred­i­bly, from 1992 to the time of his ar­rest in 2008, his busi­ness had been the sub­ject of six in­ves­ti­ga­tions by the US Se­cu­ri­ties and Ex­change Com­mis­sion, yet he was still able to trade. How were Mad­off’s cha­rade and En­ron’s reign able to last so long?

In both cases, very few peo­ple asked the ap­pro­pri­ate ques­tions, and those who did, and found an­swers, were not lis­tened to by those who had the power to make a dif­fer­ence.

The role crit­i­cal ques­tion­ing plays in un­cov­er­ing fraud, deal­ing with lazy and bi­ased think­ing or man­ag­ing deep-seated prob­lem be­hav­iour is ob­vi­ous, but it also has a role in un­earthing cre­ativ­ity and get­ting the best out of a busi­ness or team. Deeper pros­e­cu­tion of a topic and the clar­ity it brings will un­doubt­edly fos­ter bet­ter de­ci­sion­mak­ing.

In fact, lead­er­ship guru Peter Drucker ac­knowl­edges that “the leader of the past was a per­son who told. The leader of the fu­ture will be a per­son who asks.”

Cen­tral to Drucker’s rea­son­ing is de­bunk­ing one of the great­est myths of lead­er­ship – the dan­ger­ous and lim­it­ing as­sump­tion that any one leader has all the an­swers. The re­al­ity is, it’s much more im­por­tant that lead­ers de­velop the ca­pac­ity to ask rel­e­vant ques­tions as they will never have all the an­swers them­selves.

A great ques­tion will chal­lenge, stim­u­late, scare or pre­pare some­one. It can show that you un­der­stand, you care, and you lis­ten. Great ques­tions al­low you to cir­cle a con­cept, probe it, de­velop it and use it. They also al­low you to do so col­lab­o­ra­tively rather than in­di­vid­u­ally.

The abil­ity to in­ter­ro­gate through ques­tion­ing is an al­most in­nate char­ac­ter­is­tic for hu­mans so it’s not un­rea­son­able to sug­gest that lead­ers be more child­like in their propen­sity to ask ques­tions.

Paul Har­ris, a pro­fes­sor of ed­u­ca­tion at Har­vard, found that chil­dren ask about 40,000 ques­tions be­tween their sec­ond and fifth birth­days. As adults, the ca­pac­ity or at least the ten­dency to do so di­min­ishes.

A Har­vard Busi­ness Re­view ar­ti­cle, “To Have the Most Im­pact, Ask the Right Ques­tions”, by Chris Mus­sel­white and Tammie Plouffe, high­lights three types of ques­tions which may be most ef­fec­tive:

1. Con­ver­gent ques­tions, aim­ing to clar­ify the specifics of a sit­u­a­tion, ask­ing what, where, who or when.

2. Ex­pan­sive ques­tions, giv­ing a per­son the op­por­tu­nity to ex­pand on their think­ing, el­e­vat­ing them to see the broader con­text of their realm, ask­ing why or what if.

3. In­te­grat­ing ques­tions, aim­ing to find com­mon ter­ri­tory and unite dis­parate views, ask­ing if ... then what.

One pre­cau­tion when ask­ing ques­tions is the bias you po­ten­tially bring to your line of in­quiry. In Why Great Man­agers Al­ways Ask the Right Ques­tions, Gary Co­hen high­lights five key bi­ases you should be aware of:

1. Neg­a­tive bias – a neg­a­tive ex­pe­ri­ence has a larger in­flu­ence on your per­spec­tive than is ap­pro­pri­ate given the ev­i­dence.

2. Fre­quency bias – some­thing you see reg­u­larly and over time may be more be­liev­able.

3. Re­cency bias – some­thing you just learnt or saw may have un­due in­flu­ence.

4. At­tach­ment bias – you are wed­ded to the sta­tus quo.

5. Con­fir­ma­tion bias – you are con­tin­u­ally look­ing for ev­i­dence to con­firm your view, ig­nor­ing po­ten­tially con­tra­dic­tory ev­i­dence in the process.

Of course, even if some­one is ask­ing the right ques­tions, oth­ers must be pre­pared to lis­ten and the cul­ture must en­cour­age such lis­ten­ing. Those an­a­lysts and in­vestors who had asked some of the most im­por­tant ques­tions of En­ron and Mad­off were sub­se­quently os­tracised by those se­duced by the am­brosia of their sto­ries.

Harry Markopo­los, the foren­sic ac­coun­tant and author of No One Would Lis­ten, the story of his own ex­pe­ri­ence as a whistle­blower in the Mad­off case, alerted the SEC to the po­ten­tial fraud­u­lent ac­tiv­ity of Mad­off three times, in 2000, 2001 and 2005. His 2005 re­port was bluntly en­ti­tled, “The World’s Largest Hedge Fund is a Fraud”. Even then, no one lis­tened.

No sin­gle ques­tion will nec­es­sar­ily touch the heart of any mat­ter but none should be wasted ei­ther. Each ques­tion should aim to bring your team one step closer to clar­ity and shared un­der­stand­ing, and then ac­tion.

Crit­i­cal ques­tion­ing and re­spect­ful lis­ten­ing is an in­sur­ance pol­icy against aber­rant be­hav­iour and will lead to a more creative and high-per­form­ing or­gan­i­sa­tion. Good lead­ers ask great ques­tions.

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